Getting Your Finances in Order before Buying an Orange County Home

It is a buyer’s market. This means that if you are interested in home ownership, now is the time to search. Before you preview Orange County homes or homes outside of Orange County, be sure that your finances are in order. This will help streamline your home buying experience.

First, establish your budget. How much home can you afford?  Know that houses in Orange county trend upwards of $2 million dollars. If you aren’t ready to move into a luxury home, adjust your sights accordingly. Your credit score sometimes limits the amount of home you would be able to buy anyway. You are entitled to a free copy of your credit score from one of the three credit reporting bureaus. They are Equifax, Experian, and TransUnion.  Either one will do. You won’t be able to get a home without one of these, unless you intend on paying cash for your new home.

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Since most people don’t have $2 million in cash laying around, they go to a bank for financing. With your credit report in hand, you can create your budget. You’ll be able to figure out what your monthly budget will be. If there are errors on your credit report, you can fix them before you move forward with a budget. You know that you paid off that credit card, why is Experian reporting that it is outstanding. Get this fixed before you proceed.

If you have a good credit rating, you can shop interest rates. The best way to get the best interest rate is to go through the preapproval process. This includes a lender looking at your credit and financial history and determining how much they can lend you for a home. With a pre-approval letter in hand, you can securely shop for home and good interest rates. The average interest rate for a home with a 30-year note is 4.5%. Your financial situation may dictate a lower or higher rate.

If you can’t go the traditional route with financing, there are alternatives. You can borrow from your whole life policy. It doesn’t matter, as long as you get yourself into a building to live.  As you probably know, a whole life insurance policy is one that accumulates cash value over time. The only hitch is that you make regular payments as your investment earns dividends and interest. It is not always a good idea to cash in your life insurance policy so make sure that the house you purchase is worth this risk.

A seller may be willing to bypass banks and mortgage payments if you purchase it directly from them. This may be an option if they cannot sell their home. Orange county real estate is notoriously expensive and purchasing a house may depend upon the real estate climate. If you find a seller who wants to rent to own or finance your luxury home, you should jump on it.

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